Financial Fair Play
The UEFA Club Licencing and Financial Fair Play Regulations (FFP) were introduced by UEFA to improve the financial stability of clubs by maintaining controls on club overspending. A financial breakeven assessment is conducted over a three-year period, during which a club may overspend by a maximum of €5m, or €30m if the club owner is willing to directly cover it. Long term investment in stadiums, training facilities, youth development and women's football are not taken into account under the assessment.
Manchester City F.C. (Man City) was previously found to have breached FFP in 2014 and was fined €60m (€40m of which was suspended).
Man City's Breach
A further investigation was opened by UEFA's Club Financial Control Body (CFCB) following the publication in 2018 of leaked emails that purported to show that £51 million of the sponsorship Man City received from Etihad Airways actually came from Abu Dhabi United Group, a company controlled by its ultimate owner Sheikh Mansour. Although FFP allows for sponsorship deals between a club and its owner, these deals must reflect market valuations.
In November 2019 the Court of Arbitration for Sport (CAS) rejected Man City's application to stop the CFCB investigation, holding that the CFCB had not then determined whether Man City would be sanctioned and should be allowed to do so.
The Independent Adjudicatory Chamber of the CFCB ultimately found that Man City had committed two breaches of the FFP by:
- overstating its sponsorship revenue in its accounts and in the break-even information submitted to UEFA between 2012 and 2016; and
- failing to cooperate in the investigation of this case by the CFCB.
As a result, Man City has been banned from participating in European competition for two years (the 2020/21 and 2021/22 seasons), meaning that this season may be Pep Guardiola's last chance to win the Champions League with Man City. The club was also fined €30m.
Man City deny breaching FFP and have appealed the CFCB's decision to CAS. Man City will raise procedural issues with the decision before CAS, particularly the fact that the emails being relied upon by the CFCB, which sparked the investigation, were leaked and possibly hacked.
The CAS decision can be appealed to the Swiss Federal Supreme Court followed by a potential application to the European Court of Human Rights (ECtHR). We recently considered the ECtHR's jurisdiction to hear applications in respect of CAS decisions in the context of the Claudia Pechstein case here.
The two year ban only affects Man City's involvement in European competition. However, should CAS uphold the CFCB decision, the Premier League may also consider taking action against Man City under its own financial regulations.